Earth Biofuels concludes $10 million convertibles sale; Whiterock REIT wraps C$33.53 million PIPE

By Sheri Kasprzak

New York, June 8 - Heading up another light day for private placements Thursday was a $10 million convertibles deal from Earth Biofuels, Inc. - the second such offering for the company in the past week.

The company sold 8% notes to a group of institutional investors. The notes are due in September 2006 and are convertible into common shares at the greater of $1.00 each or 75% of the market price on the initial maturity date.

The notes are not convertible until maturity and after the initial maturity date, the maturity may be extended to December 2006.

The investors received warrants for 1.5 million shares, exercisable at $2.93 each for five years.

Cowen & Co. was the placement agent.

On Thursday, Earth Biofuels stock fell 11 cents, or 4.23%, to end at $2.49 (OTCBB: EBOF).

Proceeds will be used for the construction of or acquisition of biodiesel and ethanol facilities. The remainder will be used for general corporate purposes.

Doug Jones of the company's investor relations department did not return a call for comment on the offering by press time Thursday.

The company completed a similar offering for proceeds of $5 million on May 31.

In that offering, Evolution Master Fund, Ltd. bought 8% notes due in 90 days. Those notes are also convertible at the greater of $1.00 each or 75% of the market price at the initial maturity date.

After the May 31 offering, Earth's stock closed at $3.20.

Moving to the company's latest earnings statement, Earth reported a net loss of $6.48 million for the quarter ended March 31, compared with a net loss of $42,177 for the same period of 2005.

Earth Biofuels, based in Dallas, develops alternative fuels, including biodiesel.

Stocks, oil, gold prices stifle PIPEs

In the broader market, stocks barely moved after three straight sessions of losses, and oil prices also dipped, impacting PIPE activity in both the United States and Canada.

"I think at this point everyone is watching what stocks are doing," said one New York-based market source. "It's a wait-and-see game. I think there is a market for these [deals], it's just a matter of pricing them and getting them out there, but no one wants to price."

Another market source, this one based in Vancouver, B.C., said a drop in oil prices Thursday and a downward trend in gold may be negatively impacting the number of offerings in the pipeline north of the border.

"There's really nothing," he said. "It's amazing. We had so much stuff, not even a week ago. Oil's off, gold seems to be slipping and that's affecting minerals [stocks]. That makes up the majority of everything we do, thus no offerings."

As to stocks, the Dow Jones Industrial Average closed below 11,000 for the second straight session, gaining just 7.92 to end at 10,938.82. The Nasdaq composite index fell 6.48 to close at 2,145.32 but the Standard & Poor's 500 composite index gained 1.78 to close at 1,257.93.

Oil prices fell 47 cents to end at $70.35 per barrel.

Whiterock's C$33.53 million PIPE

In other PIPE activity Thursday, Whiterock Real Estate Investment Trust completed a private placement of trust units for C$33,535,612.

The company sold 10,318,650 trust units at C$3.25 each.

The stock closed the day down 3.85%, or 13 cents, at C$3.25 (Toronto: WRK).

The offering was placed through a syndicate of agents led by RBC Capital Markets Inc.

The deal was announced without pricing terms on May 11.

Proceeds from the deal will be used to partially pay for a C$50 million acquisition program of properties.

On Jan. 23, the company completed a similar offering, selling 6,527,839 trust units at C$2.50 apiece and C$3 million in 9% convertible debentures. The debentures, due Dec. 21, 2010, are convertible into trust units at C$3.00 each.

After the January PIPE, Whiterock's stock closed a C$2.98.

Toronto-based Whiterock is a real estate investment trust focused on acquiring and developing retail and industrial properties.

Kereco raises C$21.98 million

In other Canadian PIPE action, Kereco Energy Ltd. concluded a C$21,975,000 private placement of 1.5 million flow-through shares at C$14.65 each.

The offering was placed through a syndicate of underwriters led by GMP Securities LP and Tristone Capital Inc.

Proceeds will be used for the company's 2006 and 2007 exploration programs.

The stock closed down 25 cents at C$10.25 (Toronto: KCO).

Kereco, based in Calgary, Alta., is an oil and natural gas exploration company.

Bluefly stock dips

Bluefly, Inc.'s stock slipped Thursday, a day after the company announced a $50 million PIPE.

The stock fell 5 cents, or 4.9%, to close at $0.97 (Nasdaq: BFLY).

On Wednesday, when the deal was announced, the stock ended down 5.56%, or 6 cents, to end the session at $1.02.

In the placement, Quantum Industrial Partners LDC; SFM Domestic Investments, LLC; Maverick Fund USA, Ltd.; Maverick Fund, LDC; Maverick Fund II, Ltd.; and Prentice-Bluefly, LLC agreed to buy shares of Bluefly at $0.82 each, an 11% premium to the company's closing stock price on Monday of $0.74.

The placement is slated to close June 15.

New York-based Bluefly is an online clothing retailer.

Peace Arch stock loses 7.4%

Peace Arch Entertainment Group Inc.'s stock fell 7.41% after wrapping a C$9,075,000 private placement on Wednesday.

The company's stock lost 12 cents to end the session at C$1.50 (Toronto: PAE).

On Wednesday, when the deal wrapped, the stock gained 4.52%, or 7 cents, to settle at C$1.62.

The company sold shares at C$1.21 each to a group of institutional and private investors, led by Todd Wagner.

Proceeds will be used for debt repayment related to the company's acquisition of kaBoom! Entertainment Inc., a Canadian home-entertainment distributor.

Peace Arch, located in Toronto, acquires, produces and distributes feature film and television programs.

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